**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

**FORM10-K**

 

**ANNUALREPORT PURSUANT TO SECTION 13OF THE SECURITIES EXCHANGE ACT OF 1934**

 
| **For the fiscal year ended June 30, 2004** |   | **Commission File Number 1-7256** |
|--------------------------------------------------|--------|-----------------------------------|

 

**INTERNATIONAL ALUMINUM CORPORATION**

(Exact name of Registrant as specified in its charter)

 

| **California**                                                              |   | **95-2385235**        |
|-----------------------------------------------------------------------------|--------|-----------------------|
| (Incorporation)                                                             |   | (I.R.S. Employer No.) |
|                                                                        |
| **767 Monterey Pass Road  Monterey Park, California 91754  (323) 264-1670** |
| (Principal executive office)                                                |

 

Securitiesregistered pursuant to Section 12(b) of the Act:

 
| **Title of  Each Class**       |   | **Names of  Exchanges on Which Registered** |
|--------------------------------|--------|---------------------------------------------|
| Common Stock ($1.00 Par Value) |   | New York Stock Exchange                     |

 

Securitiesregistered pursuant to Section 12(g) of the Act:  **None**

 

Indicateby check mark whether the Registrant (1) has filed all reports required to befiled by Section 13 of the Securities Exchange Act of 1934 during thepreceding 12 months and (2) has been subject to such filing requirements forthe past 90 days.  Yes ý  No o

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof Registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K.  ý

 

Indicateby check mark whether the registrant is an accelerated filer (as defined inRule 12b-2 of the Act).  Yes  o No ý

 

AtSeptember 8, 2004 there were 4,244,794 shares of Registrant’s Common Stockoutstanding.  The aggregate market valueof shares held by non-affiliates was $68,562,242 based on the New York StockExchange composite closing price on that date.

 

**DOCUMENTS INCORPORATED BY REFERENCE**

 

Registrant’sAnnual Report to Shareholders for fiscal year ended June 30, 2004 isincorporated by reference into Parts I and II.

 

Registrant’sProxy Statement dated September 20, 2004 for the Annual Meeting ofShareholders to be held on October 28, 2004, other than the StockPerformance Graph, the Compensation Committee Report, and the Audit CommitteeReport, is incorporated by reference into Parts III and IV.

 

 

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PART I

 

ITEM 1.  BUSINESS

 

a.     GENERALDEVELOPMENT OF BUSINESS

 

InternationalAluminum Corporation is an integrated building products manufacturer ofdiversified lines of quality aluminum and vinyl products.  The Company was incorporated in Californiain 1963 as successor to an aluminum fabricating business begun in 1957 andmaintains its executive offices at 767 Monterey Pass Road, Monterey Park,California 91754.  The Company’stelephone number is (323) 264-1670. Reference to the “Registrant”, “International Aluminum Corporation” orthe “Company” includes International Aluminum Corporation and its subsidiariesunless the context indicates otherwise.

 

b.     INDUSTRYSEGMENTS, LINES OF BUSINESS AND CLASSES OF PRODUCTS

 

Thisinformation is included on pages 4 and 18 of the Registrant’s 2004 AnnualReport to Shareholders and is hereby incorporated by reference.

 

c.     NARRATIVEDESCRIPTION OF BUSINESS

 

Processesand Products

 

Residential

 

Residentialproducts are fabricated from aluminum and vinyl into a broad line of horizontalsliding windows, vertical sliding windows, casement windows, garden windows,bay and bow windows, special configuration windows, louvre windows, patiodoors, wardrobe mirror doors and related products.  These products are used in new residential construction and inremodeling, home improvement and replacement.

 

Commercial

 

Commercialproducts are fabricated from aluminum into curtainwalls, window walls, slopeglazed systems, storefront framing, entrance doors and frames and commercialoperable windows for exterior applications and officefronts, office partitions,doors and frames for interior applications. These products are utilized in varying combinations to produce systemsused for office and commercial construction, remodeling and tenant improvementapplications.

 

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Aluminum Extrusion

 

Inthe extrusion process, heated aluminum billets are hydraulically forced throughsteel dies to produce a piece of metal of the desired cross-sectional shape andlength.  The extrusions are then cutand, when requested, anodized or painted in a variety of finishes in theCompany’s anodizing and painting departments.

 

Aluminumextrusions produced by the Company are used in fabricating substantially all ofits other aluminum products. During fiscal 2004, approximately 51% ofextrusions produced were sold to non-affiliated customers with the balanceutilized by International Aluminum Corporation subsidiaries.  The Company furnishes design services toassist its customers in developing or better utilizing custom extrusions.

 

Salesand Distribution

 

TheCompany markets its residential products primarily to lumber yards, homeimprovement centers, independent dealers and distributors, with whom theCompany has no long-term contracts. Commercial building products are marketed primarily to glazing andtenant improvement contractors. Aluminum extrusions are marketed principally by direct sales to othermanufacturers.

 

Eachof the Company’s subsidiaries has its own administrative and salesorganizations.  Sales are made primarilyin North America.

 

Nocustomer accounted for more than 5% of net sales in 2004, and no material partof the business is dependent upon a single customer or a few customers, theloss of any one or more of whom would have a materially adverse effect on thebusiness of the Company.  The Companydoes business on a current basis and has no significant backlog of unfilledfirm orders.

 

Seasonality

 

Salesof products designed for residential and commercial applications are subject tocyclical swings in new construction and seasonal fluctuations due to reducedconstruction activity in some marketing areas during the winter months (secondand third quarters).

 

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Materials

 

TheCompany purchases its aluminum requirements from primary aluminum producers,under supply agreements at market prices, or spot metal brokers.  Although increased worldwide demand producesperiods of tight supply of aluminum, the Company has had satisfactoryexperience to date in obtaining sufficient raw materials to meet itsrequirements and does not anticipate material shortages that wouldsignificantly hamper its operations.

 

Flatglass is purchased from domestic glass manufacturers. The Company has hadsatisfactory experience to date in obtaining sufficient glass to meet itsrequirements.

 

TheCompany produces the aluminum extrusions used in the products it manufacturesand sells.  Vinyl, hardware and smallparts are purchased from outside sources.

 

WorkingCapital

 

Tomaintain an adequate supply of aluminum to meet customer delivery requirementsand to assure itself of a continuous allotment of materials from its suppliers,the Company may at times carry a significant inventory of aluminum.  Depending on price and availability, bulkquantities may be purchased from either primary aluminum producers or from spotmetal brokers.

 

TheCompany does not believe there are any abnormal working capital requirementsassociated with any of its product groups as merchandise is normally producedfor specific customer orders or shipped from inventory and as a generalpractice extended payment terms are not granted to customers.

 

Employees

 

Asof June 30, 2004, the Company had approximately 1,500 full-timeemployees.  Management believes that theCompany’s employee relations are good.

 

Patents

 

TheCompany has no material patents, either issued or pending, and is not a partyto any significant licensing agreements.

 

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Competition

 

TheCompany’s business is highly competitive. Competition in all product lines ison the basis of price, service and product quality.  The manner and extent of such competition depends on the productbeing marketed and the relevant marketing area.  The Company faces competition primarily from numerous fabricators.Several of the Company’s major competitors in selling commercial products andaluminum extrusions are substantially larger, more diversified and have greaterresources than the Company.

 

Expansionof its product lines may result in the Company competing with certain of itspresent customers.  While the Companycannot accurately predict the effect, if any, that such development would haveon its business, the Company anticipates no material adverse effect.

 

Sincea substantial portion of the Company’s business is connected with residentialand commercial building construction, any significant decrease in new orremodeling construction could adversely affect the Company’s revenues.  Experience has shown that high interestrates for construction financing, residential mortgage and home improvementloans may adversely affect the Company’s revenues.

 

GovernmentRegulation

 

The Company’s aluminum extrusion, anodizing,painting and manufacturing facilities are subject to water and air pollutioncontrol standards mandated by federal, state and local law.  While the Company anticipates no materialcapital expenditures to meet established environmental quality controlstandards, there can be no assurance that more stringent standards will not beestablished which might require such expenditures.

 

TheCompany is subject to various federal and state labor laws which govern itsrelationship with employees, including with regard to minimum wagerequirements, overtime pay and other working conditions.  Significant new government-imposed increasesin minimum wage rates, paid leave of absence or mandated health benefits couldhave an adverse effect on our results of operations.

 

d.             FINANCIALINFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS

 

Theinformation concerning income before taxes of foreign and domestic operationsfor fiscal years 2004, 2003 and 2002 is set forth in Note 9 to the consolidatedfinancial statements included on page 17 of the Company’s 2004 Annual Reportincorporated herein by reference.  Thereis no other significant related information regarding foreign operations.

 

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ITEM2.  PROPERTIES

 

Thefollowing table sets forth information concerning the location, size and use ofthe Company’s present facilities:

 
| **Location**            |   | **Square****Feet (A)** |   | **Use**                                       |   |
|-------------------------|--------|------------------------|--------|-----------------------------------------------|--------|
|                    |   |                   |   |                                          |   |
| Alhambra, CA            |   | 185,000                |   | Aluminum extrusions, foundry &  finishing |   |
| Waxahachie, TX          |   | 269,000                |   | Aluminum extrusions & finishing           |   |
| South Gate, CA          |   | 189,000                |   | Residential products                          |   |
| Hayward, CA             |   | 103,000                |   | Residential products                          |   |
| Phoenix, AZ             |   | 100,000                |   | Residential products                          |   |
| Vernon, CA              |   | 134,000                |   | Commercial products                           |   |
| Bedford Park, IL        |   | 81,000                 |   | Commercial products                           |   |
| Boston, MA              |   | 21,000                 | (L)    | Commercial products                           |   |
| Detroit, MI             |   | 12,000                 | (L)    | Commercial products                           |   |
| Waxahachie, TX          |   | 159,000                |   | Commercial products                           |   |
| Denver, CO              |   | 16,000                 | (L)    | Commercial products                           |   |
| St. Louis, MO           |   | 14,000                 | (L)    | Commercial products                           |   |
| Dallas, TX              |   | 36,000                 | (L)    | Commercial products                           |   |
| Houston, TX             |   | 19,000                 | (L)    | Commercial products                           |   |
| Rock Hill, SC           |   | 74,000                 |   | Commercial products                           |   |
| Atlanta, GA             |   | 37,000                 | (L)    | Commercial products                           |   |
| Baltimore, MD           |   | 20,000                 | (L)    | Commercial products                           |   |
| Langley, B.C., Canada   |   | 63,000                 |   | Commercial products                           |   |
| Guelph, Ontario, Canada |   | 72,000                 |   | Commercial products                           |   |
| Houston, TX             |   | 57,000                 |   | Commercial products                           |   |
| Waxahachie, TX          |   | 60,000                 |   | Commercial products                           |   |
| Dallas, TX              |   | 14,000                 | (L)    | Commercial products                           |   |
| Monterey Park, CA       |   | 19,000                 | (L)    | Executive offices                             |   |

 

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(A)  Includesmanufacturing, warehouse and office space; excludes construction in process,parking and yard storage space.

 

(L)   Indicatesleased premises.

 

Ofthe 1,754,000 square feet exhibited above, 1,546,000 square feet are owned bythe Company.  The balance of 208,000square feet is leased under agreements expiring at various dates.  The Company believes that its facilities areadequate for its current and anticipated future levels of operations.

 

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ITEM3.  LEGAL PROCEEDINGS

 

TheCompany has litigation pending arising from the usual conduct of its business,none of which is expected to have any material effect on the Company’sfinancial position.

 

ITEM4.  SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS

 

Nomatters have been submitted to a vote of security holders that are required tobe reported under the instructions to this item.

 

PART II

 

ITEM5.  MARKET FOR THE REGISTRANT’S COMMON STOCKAND RELATED STOCKHOLDER MATTERS

 

Themarket and dividend information is included on pages 8 and 20 of the Company’s2004 Annual Report to Shareholders and is incorporated herein by reference.

 

Thereare no restrictions of future cash dividends.

 

Therewere approximately 350 shareholders of record of the Company’s common stock atJune 30, 2004.

 

ITEM6.  SELECTED FINANCIAL DATA

 

Selectedfinancial data pertaining to the Company for the last five years is set forthon page 4 of the Company’s 2004 Annual Report to Shareholders and isincorporated herein by reference.

 

ITEM7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This information is set forth on pages 2through 7 of the Company’s 2004 Annual Report to Shareholders and isincorporated herein by reference.

 

ITEM7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK

 

Fluctuating foreign exchange rates may impactthe Company’s earnings.  The Company’sforeign exchange exposure is related to activities associated with its Canadiansubsidiaries.  The Company does notattempt to manage these risks by entering into forward exchange contracts.

 

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ITEM8.  FINANCIAL STATEMENTS AND SUPPLEMENTARYDATA

 

SeePart IV, Item 15.

 

ITEM 9.  CHANGES IN ANDDISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

Therehave been no disagreements that are required to be reported under theinstructions to this item.

 

ITEM9A.  CONTROLS AND PROCEDURES

 

TheCompany maintains disclosure controls and procedures (as defined in ExchangeAct Rule 13a-15(e) and 15d-15(e)) that are designed to ensure that informationrequired to be disclosed in the Company’s Exchange Act reports is recorded, processed,summarized and reported within the time periods specified in the Securities andExchange Commission’s rules and forms, and that such information is accumulatedand communicated to the Company’s management, including its Chief ExecutiveOfficer (“CEO”), Chief Operating Officer (“COO”) and Chief Financial Officer(“CFO”), as appropriate, to allow timely decisions regarding the requireddisclosure.

 

Indesigning and evaluating the disclosure controls and procedures, managementrecognizes that any controls and procedures, no matter how well designed andoperated, can provide only reasonable assurance of achieving the desiredcontrol objectives, and management necessarily is required to apply itsjudgment in evaluating the cost-benefit relationship of possible controls andprocedures.

 

Within90 days prior to the filing date of this report, a review was performed underthe supervision and with the participation of the Company’s management,including the Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”)and the Chief Financial Officer (“CFO”), of the effectiveness of the design andoperation of the Company’s disclosure controls and procedures.  Based on that review, the Company’smanagement, including the CEO, COO and CFO, concluded that the Company’sdisclosure controls and procedures were effective.  There have been no significant changes in the Company’s internalcontrols or in other factors that could significantly affect these controlssubsequent to the completion of their review.

 

ITEM9B.  OTHER INFORMATION

 

Inapplicable

 

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PART III

 

Theinformation required under Part III is contained in the Company’s ProxyStatement for the Annual Meeting of Shareholders to be held October 28,2004, which information is incorporated herein by reference.

 

PART IV

 

ITEM15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULESAND REPORTS ON FORM 8-K

 

Thefollowing items are filed as part of this report:

 
| (a)    | 1.     | Financial  Statements                                                                              |   |
|--------|--------|----------------------------------------------------------------------------------------------------|--------|
|   |   | Consolidated Financial Statements (See Note):                                                      |   |
|   |   | Balance sheets -  June 30, 2004 and 2003                                                      |   |
|   |   | Statements for the three years ended June 30,  2004 -                                         |   |
|   |   | Income                                                                                             |   |
|   |   | Shareholders’  equity                                                                         |   |
|   |   | Cash flows                                                                                         |   |
|   |   | Notes to consolidated financial  statements                                                        |   |
|   |   | Report of Independent Registered  Public Accounting Firm                                           |   |
|   |   |                                                                                               |   |
|   | 2.     | Financial  Statement Schedules                                                                     |   |
|   |   | Report of Independent  Registered Public Accounting Firm on Financial Statement Schedule           |   |
|   |   | Schedule for  the three years ended June 30, 2004 -II Valuation and qualifying  accounts |   |

 

NOTE:            Theconsolidated financial statements referred to above are included in the 2004Annual Report to Shareholders and are incorporated herein by reference.

 

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3.             Exhibits

 

3.1and 3.2  Articles of incorporation andby-laws.  This information is set forthas Exhibits 2.2 and 2.3 to the September 9, 1977 Registration Statement onForm S-7, and was amended by Proxy Statements dated September 26, 1978 andSeptember 21, 1988 furnished to shareholders in connection with therelated Annual Meeting of Shareholders held on October 26, 1978 andOctober 27, 1988, respectively.  Thesedocuments were filed by the Registrant with the Securities and ExchangeCommission and are incorporated herein by reference.

 

13.1  Annual Report to Shareholders

 

14.1  Code of Business Conduct and Ethics ascontained in Registrant’s Proxy Statement and incorporated herein by reference

 

14.2  Code of Ethics for Senior Executives andSenior Financial Officer as contained in Registrant’s Proxy Statement andincorporated herein by reference

 

21.1  Subsidiaries of the registrant

 

23.1  Consent of PricewaterhouseCoopers LLP

 

31.1  Certification of the Chief Executive Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

31.2  Certification of the Chief Operating Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

31.3  Certification of the Chief Financial Officerpursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1  Certification of the Chief Executive Officerpursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002

 

32.2  Certification of the Chief Operating Officerpursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002

 

32.3  Certification of the Chief Financial Officerpursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002

 

(b)           Reportson Form 8-K filed during the quarter ended June 30, 2004:

May 11, 2004 – Reporting thepress release dated May 11, 2004 announcing financial results for the thirdquarter ended March 31, 2004.

 

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SIGNATURES

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Actof 1934, the Registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.

 
|                                | INTERNATIONAL  ALUMINUM CORPORATION |
|-------------------------------------|-------------------------------------|
|                                |                                |   |
| Date:  September 21, 2004 | By:                                 | MITCHELL K. FOGELMAN |
|                                |                                | Mitchell K. Fogelman |
|                                |                                | Senior Vice President-Finance |
|                                |                                | and Chief Financial Officer |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the Registrant and inthe capacities and on the dates indicated.

 
| **Signature**            |   | **Title**                       |   | **Date**                |
|--------------------------|--------|---------------------------------|--------|-------------------------|
|                     |   |                            |   |                    |
| CORNELIUS  C. VANDERSTAR |   | Chairman  of the Board and      |   | September 21, 2004 |
| Cornelius  C. Vanderstar |   | Chief Executive Officer         |   |                    |
|                     |   |                            |   |                    |
| DAVID  C. TREINEN        |   | Director;  President; Secretary |   | September 21, 2004 |
| David  C. Treinen        |   | and Chief Operating Officer     |   |                    |
|                     |   |                            |   |                    |
| RONALD  L. RUDY          |   | Director  and Senior            |   | September 21, 2004 |
| Ronald  L. Rudy          |   | Vice President-Operations       |   |                    |
|                     |   |                            |   |                    |
| MITCHELL  K. FOGELMAN    |   | Senior  Vice President-Finance  |   | September 21, 2004 |
| Mitchell  K. Fogelman    |   | and Chief Financial Officer     |   |                    |
|                     |   |                            |   |                    |
| MICHAEL  J. NORRING      |   | Controller  and Chief           |   | September 21, 2004 |
| Michael  J. Norring      |   | Accounting Officer              |   |                    |
|                     |   |                            |   |                    |
| DAVID  M. ANTONINI       |   | Director                        |   | September 21, 2004 |
| David  M. Antonini       |   |                            |   |                    |
|                     |   |                            |   |                    |
| JOHN  P. CUNNINGHAM      |   | Director                        |   | September 21, 2004 |
| John  P. Cunningham      |   |                            |   |                    |
|                     |   |                            |   |                    |
| ALEXANDER  L. DEAN       |   | Director                        |   | September 21, 2004 |
| Alexander  L. Dean       |   |                            |   |                    |
|                     |   |                            |   |                    |
| JOEL  F. McINTYRE        |   | Director                        |   | September 21, 2004 |
| Joel  F. McIntyre        |   |                            |   |                    |

 

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REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

FIRM ON FINANCIAL STATEMENT SCHEDULE

 

Tothe Board of Directors of

InternationalAluminum Corporation

 

Ouraudits of the consolidated financial statements referred to in our report datedAugust 19, 2004 appearing in the 2004 Annual Report to Shareholders ofInternational Aluminum Corporation (which report and consolidated financialstatements are incorporated by reference in this Annual Report on Form 10-K)also included an audit of the Financial Statement Schedule listed in Item15(a)2 of this Form 10-K.  In ouropinion, this Financial Statement Schedule presents fairly, in allmaterial respects, the information set forth therein when read in conjunctionwith the related consolidated financial statements.

 

 

PricewaterhouseCoopersLLP

 

LosAngeles, California

August 19,2004

 

F-1

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INTERNATIONAL ALUMINUM CORPORATION AND SUBSIDIARIES

 

SCHEDULE II- VALUATION AND QUALIFYINGACCOUNTS

 

For The Three Years Ended June 30, 2004

 
| **Description**                |   | **Balance at  Beginning  of Year** |      | **Amounts  Charged  to Income** |   | **Amounts  Written  Off** |   | **Balance at  End  of Year** |    |
|--------------------------------|--------|------------------------------------|-----------|---------------------------------|--------|---------------------------|--------|------------------------------|---------|
|                           |   |                               |      |                            |   |                      |   |                         |    |
| Reserves for doubtful accounts |   |                               |      |                            |   |                      |   |                         |    |
|                           |   |                               |      |                            |   |                      |   |                         |    |
| 2004                           |   | $                                  | 1,384,000 |                            | $      | 446,000                   |   | $                            | 383,000 |   | $ | 1,447,000 |   |
|                           |   |                               |      |                            |   |                      |   |                         |    |
| 2003                           |   | 1,092,000                          |      | 810,000                         |   | 518,000                   |   | 1,384,000                    |    |
|                           |   |                               |      |                            |   |                      |   |                         |    |
| 2002                           |   | 775,000                            |      | 865,000                         |   | 548,000                   |   | 1,092,000                    |    |
|                                |        |                                    |           |                                 |        |                           |        |                              |         |  |  |  |  |

 

F-2

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